ABL Abacus Life Inc

Abacus Life, Inc. (“Abacus” or the “Company”) (NASDAQ: ABL), a leading buyer of life insurance policies and vertically integrated alternative asset manager specializing in specialty insurance products, today reported results for the quarter and full year ended December 31, 2023.

“We delivered another solid performance in the fourth quarter and throughout 2023, as we continued to leverage our expert team, wealth of data and innovative technology to execute on our multiple strategic growth initiatives,” said Jay Jackson, Chief Executive Officer of Abacus. “In addition to our strong results, we authorized a $15 million stock repurchase program, which we have continued utilizing in the new year to strong effect, and successfully completed our public bond offering, retiring existing debt and reducing the interest rate we pay by approximately 275 basis points. We’ve hit the ground running thus far in 2024 as well, officially launching our technology subdivision ABL Tech and raising an additional $25 million via our 9.875% Notes. We are well positioned to sustain our growth, to create innovative solutions for the pension fund and financial services industries through our wealth of technology and data, and ultimately to deliver long-term value to our stockholders.”

Full Year 2023 Results (on a Proforma Basis)

• Full year 2023 total revenues were $79.6 million, an increase of 14% from the prior year, primarily driven by higher active management revenue, increased capital deployed and more policies sold directly to third parties.
  • Total revenue from the portfolio servicing segment for the full year 2023 was $1.0 million, compared to $1.5 million in the prior year.
• Originations capital deployment for the full year 2023 was $218.9 million, an increase of 46% from the prior year; number of policy originations grew 30% to 633.
• GAAP net income attributable to shareholders for the full year 2023 was $8.5 million, compared to $31.3 million in the prior year.
• Adjusted net income for the full year 2023 was $29.4 million, compared to $32.4 million in the prior year.
• Adjusted EBITDA for the full year 2023 increased 13% to $39.3 million, compared to $34.8 million in the prior year. Adjusted EBITDA margin (a non-GAAP measure) for the full year 2023 was 49.4%, compared to 50.0% in the prior year.
• Return on invested capital (ROIC) (a non-GAAP measure defined below) for the full year 2023 was 21%.
• Return on equity (ROE) (a non-GAAP measure defined below) for the full year 2023 was 18%.

Fourth Quarter 2023 Highlights (on a Proforma Basis)

• Total revenue for the fourth quarter of 2023 grew 25% to $23.6 million, compared to $18.8 million in the prior-year period. The increase in the fourth quarter was primarily driven by higher active management revenue, increased capital deployed and more policies sold directly to third parties.
  • Total revenue from portfolio servicing segment for the fourth quarter of 2023 was $0.2 million, compared to $0.1 million in the prior-year period.
• Originations capital deployment for the fourth quarter of 2023 increased 92% to $68.3 million, compared to $35.5 million in the prior-year period; number of policy originations for the fourth quarter of 2023 grew 79% to 208, compared to 116 in the prior-year period.
• GAAP net loss attributable to shareholders for the fourth quarter of 2023 was $6.2 million, compared to GAAP net income attributable to shareholders of $10.1 million in the prior-year period, primarily driven by a non-cash expense related to employee stock compensation of $6.2 million, loss on fair value of warrant liability of $3.3 million, a one-time charge of $3.1 million related to debt extinguishment, and public company expenses incurred in the fourth quarter of 2023 that were not recorded in the prior-year period.
• Adjusted net income for the fourth quarter of 2023 was $5.9 million, compared to $11.0 million in the prior-year period.
• Adjusted EBITDA for the fourth quarter of 2023 was $11.0 million, compared to $11.1 million in the prior-year period. Adjusted EBITDA margin (a non-GAAP measure) for the fourth quarter of 2023 was 46.7%, compared to 52.4% in the prior-year period.
• Annualized return on invested capital (ROIC) (a non-GAAP measure defined below) for the fourth quarter of 2023 was 17%.
• Annualized Return on equity (ROE) (a non-GAAP measure defined below) for the fourth quarter of 2023 was 18%.
• Total operating expenses for the fourth quarter of 2023 were $20.0 million, compared to $4.4 million in the prior-year period. Operating expenses for the fourth quarter of 2023 included $6.2 million in non-cash employee stock compensation, which was not recorded in the prior-year period.

Liquidity and Capital

As of December 31, 2023, the Company had cash and cash equivalents of $25.6 million, balance sheet policy assets of $124.0 million and outstanding long-term debt of $89.1 million.

From the commencement of the Company’s $15 million stock repurchase program previously announced on December 12, 2023 (the “Repurchase Program”) through March 19, 2024, Abacus has repurchased 725,166 shares of its common stock at an average price of $11.20 on the open market at a total cost of approximately $8.1 million. As of March 19, 2024, the Company has $6.9 million of availability under the Repurchase Program, which expires on June 10, 2025, unless sooner suspended or discontinued.

Webcast and Conference Call

A webcast and conference call to discuss the Company’s results will be held today beginning at 5:00 p.m. (Eastern Time). A live webcast of the conference call will be available on Abacus’ investor relations website at ir.abacuslife.com. The dial-in number for the conference call is (877) 407-9716 (toll-free) or (201) 493-6779 (international). Please dial the number 10 minutes prior to the scheduled start time.

A webcast replay of the call will be available at ir.abacuslife.com for one year following the call.

Non-GAAP Financial Information

Adjusted Net Income, a non-GAAP measure, is defined as net income (loss) attributable to Abacus adjusted for non-controlling interest income, amortization, change in fair value of warrants and non-cash stock-based compensation and the related tax effect of those adjustments. Management believes that Adjusted Net Income is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance. A reconciliation of Adjusted Net Income to Net income attributable to Abacus, the most directly comparable GAAP measure, appears below.

Adjusted EBITDA, a non-GAAP measure, is defined as net income (loss) attributable to Abacus adjusted for depreciation expense, amortization, interest expense, income tax and other non-cash and certain non-recurring items that in our judgement significantly impact the period-over-period assessment of performance and operating results that do not directly relate to business performance within Abacus’ control. A reconciliation of Adjusted EBITDA to Net income attributable to Abacus Life, the most directly comparable GAAP measure, appears below.

Adjusted EBITDA margin, a non-GAAP measure, is defined as Adjusted EBITDA divided by Total revenues. A reconciliation of Adjusted EBITDA margin to Net income margin, the most directly comparable GAAP measure, appears below.

Annualized return on invested capital (ROIC), a non-GAAP measure, is defined as Adjusted net income for the quarter divided by the result of Total Assets less Intangible assets, net, Goodwill and Current Liabilities multiplied by four. ROIC is not a measure of financial performance under GAAP. We believe ROIC should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP.

Annualized return on equity (ROE), a non-GAAP measure, is defined as [Adjusted net income divided by total shareholder equity multiplied by four. ROE is not a measure of financial performance under GAAP. We believe ROE should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP. The below table presents our calculation of ROE.

Forward-Looking Statements

All statements in this press release (and oral statements made regarding the subjects of this press release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Abacus. Forward-looking information includes but is not limited to statements regarding: Abacus’s financial and operational outlook; Abacus’s operational and financial strategies, including planned growth initiatives and the benefits thereof, Abacus’s ability to successfully effect those strategies, and the expected results therefrom. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “expect,” ‎‎”intend,” “anticipate,” “goals,” “prospects,” “will,” “would,” “will continue,” “will likely result,” and similar expressions (including the negative versions of such words or expressions).

While Abacus believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. The factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: the ‎fact that Abacus’s loss reserves are bases on estimates and may be inadequate to cover ‎its actual losses; the failure to properly price Abacus’s insurance policies; the ‎geographic concentration of Abacus’s business; the cyclical nature of Abacus’s industry; the ‎impact of regulation on Abacus’s business; the effects of competition on Abacus’s business; the failure of ‎Abacus’s relationships with independent agencies; the failure to meet Abacus’s investment ‎objectives; the inability to raise capital on favorable terms or at all; the ‎effects of acts of terrorism; and the effectiveness of Abacus’s control environment, including the identification of control deficiencies.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties set forth in documents filed by Abacus with ‎the U.S. Securities and Exchange Commission from time to time, including the Annual ‎Report on Form 10-K and Quarterly Reports on Form 10-Q and subsequent ‎periodic reports. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Abacus cautions you not to place undue reliance on the ‎forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Abacus assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Abacus does not give any assurance that it will achieve its expectations.

About Abacus

Abacus is a leading vertically integrated alternative asset manager and market maker, specializing in longevity and actuarial technology. The company is democratizing the life insurance space through three groundbreaking new channels: ABL Tech, ABL Wealth, and ABL Longevity Funds. Since 2004, Abacus has purchased life insurance policies from consumers seeking liquidity and has actively managed those policies over time (via trading, holding, and/or servicing). With over $5BN in face value of policies purchased, we have helped thousands of clients maximize the value of life insurance. Abacus Life is the only public life settlement company, trading on the Nasdaq Exchange under the ticker symbol ABL.

Over the past 20 years, the company has built an institutionalized origination and portfolio management process that is supported by a 100+ person team, long-term relationships with 78 institutional partners and 30,000 financial advisors, and the ability to operate in 49 states. The Company complies with HIPAA and privacy laws to maintain and protect confidentiality of financial, health, and medical information. Abacus is also proud to be a BBB Accredited Business with an A+ rating.

www.Abacuslife.com

Contact:Abacus Life Investor Relationsinvestors@abacuslife.com

Abacus Life Public Relationspress@abacuslife.com

ABACUS LIFE, INC. Condensed Consolidated Balance Sheets
	December 31,				December 31,
		2023				2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	25,588,668			$	30,052,823
Equity securities, at fair value		2,252,891				0
Accounts receivable		2,149,111				10,448
Accounts receivable, related party		79,509				198,364
Due from affiliates		1,007,528				2,904,646
Prepaid expenses and other current assets		699,127				116,646
Total current assets		31,776,834				33,282,927
Property and equipment, net		400,720				18,617
Intangible assets, net		29,623,130				—
Goodwill		140,287,000				—
Operating right-of-use assets		1,893,659				77011
Life settlement policies, at cost		1,697,178				8,716,111
Life settlement policies, at fair value		122,296,559				13809352
Available-for-sale securities, at fair value		1,105,935				1,000,000
Other investments, at cost		1,650,000				1,300,000
Other assets		998,945				—
Equity securities, at fair value		96,107				890,829
TOTAL ASSETS	$	331,826,067			$	59,094,847
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt	$	13,029,632				—
Accrued expenses		4,354,225			$	—
Accounts payable		-				40,014
Operating lease liability, current		118,058				48,127
Due to affiliates		5,236				263,785
Due to owners		1,159,712				—
Contract liabilities - deposits on pending settlements		507,000				—
Accrued transaction costs		—				908,256
Other current liabilities		3,400,734				42,227
Income taxes payable		751,734				—
Total current liabilities		23,326,331				1,302,409
Long-term debt- Related party		37,653,869				—
Long-term debt		89,137,013				28,249,653
Operating lease liability, noncurrent		1,796,727				29,268
Deferred tax liability		9,199,091				1,363,820
Warrant liability		6,642,960				—
TOTAL LIABILITIES		167,755,991				30,945,150
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Class A common stock, $0.0001 par value; 200,000,000 authorized shares; 63,388,823 and 50,369,350 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively		6,339				5,037
Treasury Stock		(1,283,062	)		—
Additional paid-in capital		199,826,278				704,963
Retained earnings		(34,726,135	)			25,487,323
Accumulated other comprehensive income		108,373				1,052,836
Non-controlling interest		138,283				899,538
Total shareholders' equity (deficit)		164,070,076				28,149,697
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)	$	331,826,067			$	59,094,847

ABACUS LIFE, INC. Proforma Condensed Consolidated Statement of Operations
											Full Year
					YTD Sept 2023			Q4 2023				2023			2022
REVENUES:
Portfolio servicing revenue
	Related party service revenue				$	711,975		$	66,703		$	778,678		$	818,299
	Portfolio servicing					102,651			120,845			223,496			652,673
	Total Portfolio servicing revenue					814,626			187,548			1,002,174			1,470,972
Active management revenue
	Investment Income from life insurance policies held using investment method					18,473,597			(492,610	)		17,980,987			37,828,829
	Change in fair value of life insurance policies (policies held using fair value method)					28,242,105			21,766,926			50,009,031			5,263,751
	Total Active management revenue					46,715,702			21,274,316			67,990,018			43,092,580
Originations revenue
	Related Party origination revenue					3,391,814			240,455			3,632,269			18,146,493
	Originations					5,018,438			1,943,228			6,961,666			7,056,970
	Total Origination revenue					8,410,252			2,183,683			10,593,935			25,203,463
	Total Revenues					55,940,580			23,645,547			79,586,127			69,767,015
COST OF REVENUES (excluding depreciation and amortization stated below)
	Related party cost of revenue					6,566,335			91,475			6,657,810			11,631,129
	Cost of revenue					7,604,875			1,520,994			9,125,869			11,325,000
	Total Cost of revenue					14,171,210			1,612,469			15,783,679			22,956,129
Gross Profit						41,769,370			22,033,078			63,802,448			46,810,886
OPERATING EXPENSES:
	Sales and marketing					3,116,999			1,788,748			4,905,747			2,596,140
	General, administrative and other					15,961,962			15,369,189			31,331,151			9,971,247
	(Gain) loss on change in fair value of debt					309,865			2,046,193			2,356,058			90,719
	Unrealized loss (gain) on investments					(491,356	)		(877,755	)		(1,369,111	)		1,045,623
	Depreciation and amortization expense					1,702,591			1,712,934			3,415,525			18,588
	Total Operating expenses					20,600,061			20,039,309			40,639,370			13,722,317
	Operating Income				$	21,169,309		$	1,993,769		$	23,163,078		$	33,088,569
	OTHER INCOME (EXPENSE)
	Change in fair value of warrant liability					(943,400	)		(3,260,960	)		(4,204,360	)		-
	Interest (expense)					(3,632,420	)		(6,246,126	)		(9,878,546	)		(51,615	)
	Interest income					73,200			523,481			596,681			3,672
	Other income (expense)					(1,565	)		(144,879	)		(146,444	)		(346,740	)
	Total other income (expense)					(4,504,185	)		(9,128,484	)		(13,632,669	)		(394,683	)
	Net income before provision for income taxes					16,665,124			(7,134,715	)		9,530,409			32,693,886
	Income tax expense					2,240,708			(769,885	)		1,470,823			656,904
	NET INCOME					14,424,416			(6,364,830	)		8,059,586			32,036,982
	LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST					(339,692	)		(142,447	)		(482,139	)		704,699
	NET INCOME ATTRIBUTABLE TO SHAREHOLDERS				$	14,764,108		$	(6,222,383	)	$	8,541,725		$	31,332,283

ABACUS LIFE, INC. Proforma Adjusted Net Income and Adjusted EPS
		Full Year
			2023					2022
Net income attributable to Abacus Life, Inc.		$	9,516,626				$	31,682,275
Net income attributable to non-controlling interests			(482,139	)				704,699
Amortization expense			3,364,167					—
Stock compensation expense			10,768,024					—
Change in fair value of warrant liability			4,204,360					—
Tax impact of items listed above			2,069,993
Adjusted Net Income		$	29,441,031				$	32,386,974
Weighted-average shares of Class A common stock outstanding			56,951,414					50,369,350
Earnings Per Share		$	0.17				$	0.63
Adjusted Earnings Per Share		$	0.52				$	0.64

ABACUS LIFE, INC. Proforma Adjusted EBITDA
	Full Year
	2023					2022
Net Income excluding non-controlling interests		$	9,034,487				$	32,386,974
Depreciation and Amortization			3,409,928					4,282
Interest expense			9,866,821					42,798
Interest income			(594,764	)				(1,474	)
Income tax expense			1,468,535					889,943
Stock compensation			10,768,024					—
Other (Income) / Expenses			146,443					347,013
Change in fair value of warrant liability			4,204,360					—
Change in fair value of debt			2,356,058					90,719
Unrealized loss / (gain) on investments			(1,369,112	)				1,045,623
Adjusted EBITDA		$	39,290,780				$	34,805,878
Proforma Revenue		$	79,586,127				$	69,767,015
Proforma Adjusted EBITDA Margin			49.37	%				49.89	%
Proforma Net Income Margin			36.99	%				46.42	%

ABACUS LIFE, INC. Return on Invested Capital (ROIC)
		For the Period Ended
		December 31, 2023
Total Assets		$	331,826,067
Less:
Intangible assets, net			(29,623,130	)
Goodwill			(140,287,000	)
Current Liabilities			(23,326,331	)
Total Invested Capital		$	138,589,606
Adjusted Net income		$	29,441,031
Adjusted Annualized ROIC			21	%

ABACUS LIFE, INC. Return on Equity (ROE)
Return on Equity
		For the Period Ended
		December 31, 2023
Total Shareholder Equity		$	164,070,076
Proforma Adjusted Net income		$	29,441,031
Adjusted Annualized ROE			18	%